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Foreign funds inflows into the UAE hit a high of
$19.4 billion (Dh71.1bn) in the past three years,
according to the World Bank.
Capital flows into Gulf oil producers have rocketed
to nearly $59bn over the past three years. Of this,
the major portion went to Saudi Arabia, which
received around $43.1bn.
Foreign direct investments (FDI) during 2005-2007
were more than eight times the FDI flow into the GCC
during the previous nine years, the World Bank said.
Saudi Arabia and the UAE, which have the bulk of the
investments, have been locked in reforms to
diversify their oil-reliant economies by opening up
most of their sectors, privatising public
enterprises and expanding their industries.
Their combined FDI of $62.5bn surpassed the total
FDI in the GCC and the whole Middle East and North
Africa (Mena).
The report explained some countries recorded
negative growth in FDI inflow. It showed that Kuwait
was the main victim as it recorded higher capital
outflow during the past three years, standing at
around $19.1bn, which depressed the combined Gulf
FDI.
Qatar, which recorded the highest economic growth
rate in the region over the past few years because
of surging LNG exports, ranked third with FDI
totalling around $10.7bn. Oman recorded relatively
small FDI inflow, while Bahrain, one of the most
liberal economies in the Middle East, attracted
around $3.9bn. But there was a capital outflow of
nearly $100 million in 2005.
The World Bank attributed the sharp rise in FDI in
the GCC and some other Arab countries to reforms and
high economic growth due to the surge in oil prices.
Higher growth was also recorded in some
oil-importing Arab nations because of reforms.
"Sustained economic growth in conjunction with
economic diversification and ongoing reforms and
privatisations attracted large FDI flows to Mena,"
it said.
"Both resource-rich and resource-poor countries
received larger FDI flows relative to previous
years… however, FDI flowing to oil exporting
economies had been much stronger over the three
years leading up to 2006… as a result, flows to oil
producing countries overtook flows to oil importing
countries in 2005."
The report said revised figures for 2006 showed that
the Mena region experienced a sharp increase in FDI
flows to a record $51.6bn, up by nearly 66 per cent
over the 2005 FDI flow of around $31.1bn.
In 2007, FDI slipped to $45.4bn but remained high
compared to the period during 1996-2004.
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